Albertsons, Safeway deal advances

Pamela Riemenschneider
The Packer
April 07, 2014

The $9.4 billion deal between Safeway and Albertsons owner Cerberus Capital Management is a step closer after no other bidders emerged for the Pleasanton, Calif.-based chain.

The deal would make the combined chain the second largest in the U.S., with 2,400 total stores.

Cincinnati-based Kroger Co. has 2,600, but it could be Kroger Co. that benefits from this deal, especially in markets where Safeway and Albertsons overlap the most, said Pewaukee, Wis.-based retail analyst David Livingston.

“Competitors like Kroger and WinCo could not be happier,” he said. “Kroger will probably be the biggest winner in this whole deal. No one shopped Safeway or Albertsons because of price, quality or service, but more that they were an acceptable alternative for convenience shopping. Kroger will pick up that business from disgruntled customers with all the overlap.”

Safeway and Albertsons, particularly in California where they had the most overlap, were underperformers in their market, he said, typically 20% or more below market average in sales per square foot.

“I expect Safeway sales to decline about 15%, which is normal when a below average operator takes over another below average operator,” he said.

Store closures are inevitable where the companies overlap, particularly in California, Arizona, Dallas and other markets in the West.

“Cerberus has had a long time to develop their plan and should breeze through FTC hearings,” he said. “Just like the last big Cerberus acquisition of Albertsons, we saw stores sold or closed by the bushel.”

- See more at: http://www.thepacker.com/fruit-vegetable-news/Albertsons-Safeway-deal-ad...

The $9.4 billion deal between Safeway and Albertsons owner Cerberus Capital Management is a step closer after no other bidders emerged for the Pleasanton, Calif.-based chain.

The deal would make the combined chain the second largest in the U.S., with 2,400 total stores.

Cincinnati-based Kroger Co. has 2,600, but it could be Kroger Co. that benefits from this deal, especially in markets where Safeway and Albertsons overlap the most, said Pewaukee, Wis.-based retail analyst David Livingston.

“Competitors like Kroger and WinCo could not be happier,” he said. “Kroger will probably be the biggest winner in this whole deal. No one shopped Safeway or Albertsons because of price, quality or service, but more that they were an acceptable alternative for convenience shopping. Kroger will pick up that business from disgruntled customers with all the overlap.”

Safeway and Albertsons, particularly in California where they had the most overlap, were underperformers in their market, he said, typically 20% or more below market average in sales per square foot.

“I expect Safeway sales to decline about 15%, which is normal when a below average operator takes over another below average operator,” he said.

Store closures are inevitable where the companies overlap, particularly in California, Arizona, Dallas and other markets in the West.

“Cerberus has had a long time to develop their plan and should breeze through FTC hearings,” he said. “Just like the last big Cerberus acquisition of Albertsons, we saw stores sold or closed by the bushel.”

- See more at: http://www.thepacker.com/fruit-vegetable-news/Albertsons-Safeway-deal-ad...

The $9.4 billion deal between Safeway and Albertsons owner Cerberus Capital Management is a step closer after no other bidders emerged for the Pleasanton, Calif.-based chain.

The deal would make the combined chain the second largest in the U.S., with 2,400 total stores.

Click here to read more at The Packer.

Get Advice Join TDU Donate

Recent News

Stand Up Slate Wins in Cincinnati Local 100

Teamster members in Cincinnati Local 100 put their support strongly in the reform and ready for change camp. All twelve Stand Up candidates were victorious, defeating the incumbents in a three-way race. This marks another victory for reform minded Teamsters looking to change our union.

The Return of Rome Aloise: A Dark Day

After serving a two-year suspension from his union offices and salaries for corruption, Rome Aloise will reclaim his International vice president position on December 22. This is just a few hours after the Winter Solstice, which marks the start of winter and is the darkest day of the year.

View More News Posts